Global Coffee Industry Struggles as Prices Surge, Retailers Push Back
Houston, March 9, 2025 – The global coffee industry is facing significant turbulence as coffee traders and roasters drastically reduce purchases in response to a 70% surge in Arabica coffee futures since November. The steep price increase has yet to be accepted by retail stores, creating financial strain across the supply chain.
At the U.S. National Coffee Association annual convention in Houston, industry leaders expressed concerns over declining sales, shrinking cash flows, and growing uncertainty about future market stability.
Industry Hit by High Prices, Retail Resistance
The price spike has been largely driven by reduced production in key coffee-growing regions, particularly Brazil, the world’s top supplier. The shortage has prompted businesses to adopt a "hand-to-mouth" approach, purchasing only minimal quantities as needed rather than stockpiling beans.
Renan Chueiri, director general at Ecuador’s ELCAFE C.A., revealed that for the first time, his company has not yet sold its entire annual production by March.
“We would usually be sold out by now, but so far, we have sold less than 30% of our production,” he said. “The big price increase eats clients’ cash flow. They don’t have all the money to buy what they need.”
Meanwhile, a U.S. coffee roaster CEO, speaking anonymously, warned that many of his clients are struggling to sustain their businesses due to resistance from supermarkets and grocery stores to the higher prices.
“They don’t know if they will be able to sell their product at the new prices. Some people are going down,” he said. “It has been a nightmare.”
Supply Chain Disruptions and Market Consolidation
The crisis has led to severe supply chain disruptions, with coffee warehouses near U.S. ports operating at half their usual capacity. Storage companies have begun returning silos to their owners and canceling lease contracts due to lower coffee volumes.
Michael Von Luehrte, owner of broker MVLcoffee, predicted that consolidation is inevitable, as only well-capitalized companies will be able to maintain trading volumes, while smaller firms will struggle with reduced financing.
Will Prices Drop? The Brazilian Factor
Despite the current turmoil, a Reuters poll predicts a 30% decline in Arabica coffee prices by the end of 2025, as high prices curb demand and a potentially strong 2026 Brazilian harvest could ease supply constraints.
Commodities trader Louis Dreyfus noted that coffee plantations are expanding in India, Uganda, Ethiopia, and Brazil, and a large Brazilian crop could trigger a significant price drop.
“If Brazil manages to have one big crop, then that, combined with newly planted areas, could lead to a collapse in prices,” the company stated.
For now, the coffee industry faces a delicate balancing act as suppliers, traders, and retailers navigate one of the most challenging price surges in recent years.